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Asian stock markets : https://tmsnrt.rs/2zpUAr4

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Nikkei bounces as yen falls on everything but the US$

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Powell still sees rate cuts, but mum on timing

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Oil, gold and copper all on the rise

By Wayne Cole

SYDNEY, April 4 (Reuters) - Asian shares rallied on

Thursday as U.S. rate cuts remained on the menu, even if their

timing was unclear, while the yen slid against everything except

the dollar and boosted Japanese stocks.

There was also action in commodities as gold reached another

record, oil a five-month peak and copper a 13-month top, helping

lift shares in basic materials and energy companies.

Some of these gains were due to supply disruptions and

geopolitical tensions, but they also reflect optimism about

global growth given a recovery in recent factory surveys (PMI),

particularly for China.

"Steady improvement in manufacturing surveys throughout last

quarter point to momentum improving broadly in the coming

months," wrote analysts at JPMorgan in a note.

"The global manufacturing output PMI moved further into

expansionary territory in March, reflecting largely positive

results across the major economies," they added. "Global

business confidence is on the mend."

MSCI's broadest index of Asia-Pacific shares outside Japan

added 0.4%, though a holiday in China made for

thinner trading conditions.

Tokyo's Nikkei bounced 1.5% as the yen fell, with

the materials, industrials, and energy sectors leading the way.

EUROSTOXX 50 futures and FTSE futures were

little changed in early trade. S&P 500 futures rose 0.2%

and Nasdaq futures 0.3%.

Sentiment was aided by a reaffirmation from Federal Reserve

Chair Jerome Powell that U.S. rates were still on course to be

cut this year, though the timing was data dependent.

The case for easing was underpinned by a survey of the U.S.

services sector which showed its index of prices paid fell to

the lowest since March 2020, offsetting a worrying rise in the

survey of manufacturing released early this week.

That also outweighed a surprisingly strong ADP report, which

showed private sector jobs rose 184,000.

While this series has a patchy correlation to the official

payrolls report due on Friday, it was strong enough for Goldman

Sachs to revise up its forecast for payrolls by 25,000 to a

solid 240,000.

Such an outcome would top the median forecast of 200,000 and

could lead markets to again pare the chance of a June rate cut.

PRICING FEWER CUTS

Fed fund futures have already lowered the chance of

a June move to 62% from 74% a month ago.

Yet the bigger shift has been in how fast and far rates are

expected to fall, with roughly 73 basis points priced in for

this year compared to more than 140 basis points in January.

Investors have also taken 100 basis points of easing out of

2025, so that rates are now seen ending next year around 4%

rather than 3%.

That sea change has left Treasuries under water, with

10-year yields hitting a four-month high of 4.429%

on Wednesday before easing back a little to 4.356%.

The rise in yields has been generally supportive of the

dollar, though it did lose some ground following Wednesday's

U.S. services survey.

That left the euro at $1.0840, after rallying 0.6%

overnight, while the dollar index stood at 104.21 having

fallen 0.5% the previous session.

While the risk of Japanese intervention kept the dollar at

151.60 yen and shy of the 152.00 barrier, other

currencies were not so inhibited and the yen fell sharply

elsewhere.

The euro was up at 164.34 yen, having climbed 0.7%

on Wednesday to recover four days of losses, and the Canadian

dollar reached a 16-year high at 112.31 yen.

Gold extended its sparkling run to reach a fresh record at

$2,302 an ounce. The metal has climbed 12% since the

start of February, driven in part by buying from momentum funds

and commodity trading advisors (CTAs).

Oil prices have also been on a tear as Ukraine's attacks on

Russian refineries have cut fuel supply and amid concerns that

the Israel-Hamas war in Gaza may spread to include Iran,

possibly disrupting supplies from the Middle East.

A meeting of top ministers from the Organization of

Petroleum Exporting Countries (OPEC) and its allies including

Russia, kept oil supply policy unchanged on Wednesday and

pressed some countries to boost compliance with output cuts.

Brent added another 30 cents to $89.65 a barrel on

Thursday, while U.S. crude rose 30 cents to $85.73 per

barrel.